Rebundling Higher Education: A Critical Move to Avoid the Fate of the Newspaper

Rebundling services will help higher education institutions retain their position as the premier provider of advanced education, but such a transformation will significantly reshape the industry.

As a result of the internet and financial challenges, higher education might become unbundled in the next decade as its functions are separated into different pieces and markets. The decline of newspapers in the past 20 years provides an object lesson about what can happen, but higher education has strengths that newspapers lacked.

Since the late-19th century and through much of the 20th century, newspapers profitably bundled often lurid, and sometimes thoughtful, news coverage with advertising and classifieds printed on sheets made from cheap, pulped paper. Newspaper publishers made money by selling advertising and classifieds and by enlisting subscribers who paid to peruse the content. For the last decade of the 19th century and the first 50 years of the 20th, newspapers were the only way to get news and other information rapidly, cheaply and graphically to people. In the mid-20th century, television began to compete with newspapers, but it could not provide the same in-depth level of information.

With the advent of the internet, things came unraveled. News content was posted to the web where it could be obtained instantaneously, at virtually no cost to millions of people around the world. Advertisers, many of whom had already migrated to television, moved in even greater numbers to the Internet, where information about products could be directly connected to purchases through e-commerce. Classifieds were replaced by craigslist and other sites, where detailed information about products could be easily accessed and potential buyers and sellers could be connected through e-mail. In the process, newspapers became unbundled into separate markets and modalities, and their old financial model has now largely failed, leading to a major crisis in the newspaper industry.

Higher education now faces a similar unbundling. Universities currently package different services together to provide a better overall product and to subsidize some of the component parts. Research leads to better content for courses; graduate students help to teach undergraduates; the whole enterprise takes place on a campus where researchers, teachers and students can interact and learn from one another. The mix has been extraordinarily successful in the marketplace, where people pay large sums to attend college. But some of the more lucrative parts of it could be hived off with unbundling, leaving behind important functions without adequate support.

What exactly is bundled at universities? Elite universities bundle research and teaching. All teaching universities bundle the content of courses, delivery of material through seminars and lectures, social networking of students in classrooms and outside, testing for mastery of the material and accreditation through degrees and certificates. This bundling of activities is accomplished through classes, courses, credits and degrees, but they could become unbundled:

Content for individual courses or lectures might be provided online by master teachers or teams of teachers so there would be no need to go to universities for it. This content might be provided for free, or at a cost much lower than what universities charge. This is already happening with massive open online courses (MOOCs).

Delivery of this content might be primarily through the internet, even at universities that would continue to use teachers as advisers and tutors.

Social networks of students might be created through social networking media where groups of students from around the world could work together on a course through online conferencing and communications.

Testing might be done by organizations, such as the College Board, that would charge for people taking tests and make sure no cheating occurred.

Accreditation might be done by bodies, such as the American Council on Education, that would aggregate information about courses and tests taken from myriad places to attest that a person had been certified in a particular course of study.

Research might be separated from teaching as the developments described above replaced the current university-based educational model, and the result might be a significant decline in support for research.

This extreme unbundling is possible, but it is not inevitable. To begin with, it is not clear what the business models are for each unbundled activity. Who would, for example, provide the content for MOOCS if they were free? Would accreditation provided by the American Council on Education be worth as much as degrees from existing higher education institutions? Would profit-making groups or even non-profits be able to survive without the fundraising capabilities of brand-name universities with ties to alumni?

Two especially important ways in which higher education differs from the newspaper industry help to militate against a complete unbundling of higher education. Perhaps the most important of these is the advantage of linking courses, testing and accreditation in order to get the most learning, the best assessment of that learning and the most value for the student in terms of recognized achievement and mastery. This is especially true in advanced courses, in laboratory and writing courses and in established universities with a name that carries over to a degree. The second factor is closely related. Exciting things happen when people are brought together in a setting devoted to education. Social networks are formed, which provide motivation, support, mutual learning and long-term relationships. College campuses can be tremendously exciting places. Can the web be just as exciting?

Yet some unbundling will certainly occur. Where is it most likely? It will almost surely occur for courses that involve “mechanical” skills, such as accounting, geometry and algebra. It will occur for courses for which there is tremendous, widespread demand, and a fairly uniform notion of what constitutes mastery. Unbundling will probably have the greatest impact on commuter colleges with less prestige that cater to people interested in these kinds of skills. More elite institutions will be affected by the likelihood that courses will be taught in new ways with more use of the web, but they will likely retain much of their allure, especially for students and parents who want a four-year experience away from home.

The challenge for universities will be to invent new ways of bundling their activities so they can take advantage of the internet while remaining important players in higher education. My guess is that they will be largely successful in doing this, but rebundling will change the landscape of higher education in important ways.

Readers Comments

Brady identifies components he believes should remain bundled and some that can be separated from the rest. While I may not agree with all of his opinions, I appreciate that he has begun to separate out the various components of higher education and assess each one’s merit. The reality is, institutions need to have these discussions sooner rather than later, lest they find themselves scrambling in the near future to catch up with what “edupreneurs” are starting to do.

Brady correctly points out that the business models of these unbundled components of higher education have not been tested. (The most obvious example is, of course, MOOCs.) Unfortunately, with the fiscal situation as it currently is, institutions are under a lot of pressure to unbundle, even before having fully tested a stand-alone component’s viability. In the long run, we could be harming our students, who would inevitably be called upon to pay the costs for failed unbundling experiments.

I think the key difference between the newspaper and higher education industries is that the former was forced into much of the unbundling by the development of the internet. On the other hand, higher education institutions seem to be moving towards unbundling by their own choice. If they are able to retain control of how they design their service bundles, they will likely be much better protected than newspapers were.